Canada halts plans to buy Boeing fighter jets in trade dispute

By Allen Cone  |  Updated Dec. 13, 2017 at 10:22 AM
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Dec. 13 (UPI) -- Scrapping a $5.23 billion deal for new Boeing-made fighter jets, Canada announced amid a trade dispute with the company it will instead buy used jets elsewhere.

To replace its 30-year-old jets, Canada announced plans Tuesday to purchase older model F/A-18 fighter jets from Australia. The deal with Boeing would have provided for 18 new F/A-18 Super Hornet jets.

"We received a formal offer from the government of Australia and we intend to pursue it," Canadian Defense Minister Harjit Sajjan said at a news conference.

Prime Minister Justin Trudeau pledged to not do business with Boeing because of a trade complaint against Canadian rival Bombardier.

Boeing said Bombardier was selling its new C Series airliner to Delta Air Lines at "absurdly low prices."

In October, the U.S. Commerce Department imposed preliminary tariffs on the import of the C Series totaling 300 percent. Bombardier said it has not engaged in unfair trade practices and final determination on the tariffs is expected in February.

"Although we will not have the opportunity to grow our supply base, industrial partnerships and jobs in Canada the way we would if Canada purchased new Super Hornets, we will continue to look to find productive ways to work together in the future," Boeing said in a statement.

Canada expects to award a contract for its permanent replacement fleet in 2022, with delivery of the first planes targeted for 2025. Boeing can bid for the contract but government officials said the trade complaint would have to be dropped.

"Looks like Canada is between a rock and a hard place," George Ferguson, senior aerospace defense analyst for Bloomberg Intelligence said. "They canned the joint strike fighter because it was too expensive," he said, referring to the F-35. "Now they are going for used rather than new F-18s. Seems like they will need to keep buying used until the memory of this fades."

Trudeau's government warned that successful bidders for 88 new fighter jets must minimize economic harm to Canada.

"The evaluation of bids will also include an assessment of bidders impact on Canada's economic interest," Procurement Minister Carla Qualtrough said. "When bids are assessed, this will mean that bidders responsible for harming Canada's economic interest will be at a distinct disadvantage compared to bidders who aren't engaged in detrimental behavior.

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